2011 Forecast

The following are a list of events that are likely to occur in 2011 in my view:

1) Ireland repudiates the austerity budget of Mr. Cowen and Mr. Lenihan after the 2011 elections.

2) Irish rejection of austerity measures after already receiving approval for the 85 billion Euro bailout from the IMF which triggers fear in stock markets and increased volatility.

3) A stock market collapse begins on or about March 18, 2011 and continues for months. As readers may recall from a previous post, global stocks currently have a value of $51 trillion.

4) A spike in gold bullion prices coinciding with the March stock market correction.

5) Bond market yields in Europe (Ireland, Greece, Portugal, Spain, Italy, Belgium) continue to rise as the risk of default grows.

6) France begins to have difficulty selling its bonds as fiscal problems grow.

7) Bond auction failures appear in Europe and Asia. As readers may recall, the bond market is much larger than the size of the stock market. It plays the key role in my 2011 collapse forecast.

8) As the bond market begins to stumble, money flows out of commodities with crude oil dropping below $60 and copper also falling.

9) The US dollar index rises significantly reaching our target of 92.

10) The Canadian dollar drops against its US counterpart and heads toward 90 cents.

11) The Euro enters a currency crisis as sovereign debt of peripheral states weighs on the viability of the union.

12) Several American municipalities file for bankruptcy. Next year, in 2012, we will likely see the first state bankruptcies.

13) American banks take serious capital hits from the European crisis and the continuing problems in the domestic residential and commercial loan markets.

14) The high US dollar negatively impacts exports as they become too expensive for Europe and emerging markets.

15) Deflation grips the US as GDP grows slows to a crawl and then goes negative, prompting consumers to save even more.

16) Inflation in China causes further interest rate increases which combined with a strengthening Yuan push China toward a hard landing.

17) Globalization begins to unravel as trade drops off significantly.

18) Hot money flows out of the stock markets and bond markets with a giant move into gold just a Exter's inverse liquidity pyramid suggests.

79 days to March 18, 2011


  1. Mr. Bailey, just for the records, do you have any good news happening in 2011? Would be nice to know.

    And btw, can you tell us, poor devils, if you have any predictions for the end of the world? It would be also nice to know in advance. Thank you.

    And I really wish you - not yours, but my definition of - a HAPPY year of 2011.

  2. PW, why March 18, 2011? Please explain the date. Also, number 12, don't you mean next year, 2011, we will likely see the first state bankruptcies? Not 2012.

  3. Sorry to sound like a wet blanket Manuel. Although my views may seem gloomy, in the long run I believe this painful time will produce a much sounder, more reliable economic system - so that is good news. Also, the US dollar should hold up for a while longer, even strengthen against many currencies, so that is good news for US dollar holders. As for those who choose to hold gold, well, the good news is it should be particularly robust in 2011. So whether my views are gloomy or optimistic is a matter of perspective.
    And no, I do not have any end of the world predictions at all. I do expect changes, not an apocalypse.

    And Happy New Year to you and yours too Manuel.

  4. Anonymous at 5:33 pm, I apologize. I was thinking 2012 when I said next year even though 2011 is not here yet. So yes, I believe we will not see state bankruptcies until 2012, or just over a year from now.
    The March 18 date is one that I arrived at from examining numerous sources. It is a quadruple witching day for the stock market so I expect it may prove significant for the direction 2011 takes. Of course, I could be wrong.

  5. PW always remember one thing about blogging..It is your Blog, you choose to write what you feel is real and actual in your own view..And your honesty is very much appreciated..Never ever let anyone try to convince you otherwise..Because if, they with out eyes have not figured it out by now they never will.

    The Greatest Ever Bank Robbery by Martin Mayer., the collapse of the savings and loan industry. copyright 1990

    Read it and you will see it has all happened before during S&L crisis.

    A very Happy and most Gracious New Year PW.


  6. And a Happy New Year to you too Bill. I will look into your suggested reading.

  7. Don't worry folks PW has been going on at it for almost two years now nothing new.

    And when it goes south hopefully he doesn't come out and say "i said so" as I will be the first one to point out his failed predictions :-)



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